“When you are successful, it’s easy to become comfortable in your achievements. Transforming a company from within is therefore very difficult,” warns Fabrice Zumbrunnen. Zumbrunnen, now CEO of Aevis Victoria, was the CEO of Swiss retail giant Migros from 2018 to 2023.
For corporate leaders, this message is both scary—and familiar. You know you need to innovate to remain profitable and relevant in a fast-changing world. But even the best-defined plans can hit resistance when the juggernaut of the legacy business kicks in.
Zumbrunnen knows the challenge first-hand. As CEO of Migros, he enlisted Stryber to foster innovation and drive growth from adjacent and future-ready fields of business. The partnership focused on three missions: generating new revenue streams, founding a venture studio and creating a dynamic culture engine to drive forward-thinking.
“The idea was to generate new sources of revenues and establish a new culture within the company,” Zumbrunnen says.
“But companies tend to do what they know: improving the existing business but struggling to find new ways of growing. I felt we needed a fresh approach to understand new trends, opportunities and how to go about them.”
The fresh approach Zumbrunnen wanted meant finding smart ways for diversification—moving away from the legacy business model and tapping into adjacent opportunity spaces outside the massive existing supermarket business. The challenge?
Doing it in a way that delivered both timely and impactful results.
At its core, corporate innovation is not only about improving, but also about future-proofing the business and staying ahead of disruptive forces. No industry is immune from being driven out of existence—look at what Uber and Netflix did to taxi services and video rental. The life expectancy of companies has fallen rapidly over the last three decades. We estimate that a stock-market-listed company today will remain listed for an average of less than 20 years, down from 37 years in 1980.
Doomsday scenarios aside, there’s also significant upside to diversifying your revenue streams.
Stryber's research found that diversifiers—those companies which added one or more new revenue streams in the 10-year period we analyzed—outperformed non-diversifiers by up to 53% in shareholder returns. These findings prove that Zumbrunnen's "go beyond the existing business" strategy was exactly the right one.
Migros were not strangers to innovation or diversification. In its early years, the company’s visionary founder, Gottlieb Duttweiler, expanded boldly and very successfully into adjacent fields, such as travel, banking and many more. Like many big corporations, Migros thereafter had mainly grown through acquisitions.
“This growth strategy through M&A can give you the impression you’re doing a good job whereas reality can be quite different,” Zumbrunnen says. “We realized we needed to explore new ways beyond just acquisitions.”
Migros also had internal innovation teams, as most companies were developing such programs at the time. These came in various shapes and sizes—accelerators, corporate venture capital, open innovation initiatives, intrapreneur schemes.
However, looking at our data, most of these programs don’t create any new sources of revenue for their organizations.
Our research shows that 70.3 percent of companies don’t manage to create any new sources of revenue in a 10-year period, so Migros were not the only company facing this challenge.
Why are most corporate innovation programs not delivering results? The reasons are manifold:
All these behaviors can be summed up as “the innovator’s dilemma,” a term coined by the late Clayton Christensen to describe the situation where an incumbent organization is incapable of escaping its existing value system and business model.
In a majority of companies, corporate innovation as it stands today just isn't working. But there are effective ways to explore, start and scale new lines of business with a high degree of success.
In venture building, results may take time to materialize. Investing in new and untested ideas is a different approach to the culture of reliability which the legacy businesses — rightly — relies upon to generate steady returns. As Zumbrunnen notes, “the first step is involving the executive board. To really change the game, the urge for innovation needs to come from the top, as it has a huge cultural impact on the business. C-Level needs to believe diversification is the answer and a real opportunity to strengthen existing businesses."
To win the trust of the board, Zumbrunnen says that it is important to establish a robust framework of objectives, procedures, decision-making authority and accountability systems. A well-defined framework provides the necessary security for the team to take calculated risks, knowing their efforts will be supported from top down.
Thinking outside usual parameters is critical to corporate innovation. Otherwise, you risk getting stuck in a cycle of ‘active inertia,’ where the team is busy making small improvements, but the leaps that are necessary for true diversification never materialize.
Big ideas need harnessing within some kind of framework, however, else they risk becoming just that—ideas.
Having a clear-eyed view of the company's priorities ensures you’re not engaging in aimless experimentation. “In these kinds of engagements, you need to be clear about your motivation: Why are we doing this? How is this a part of the business strategy?” Zumbrunnen says.
Migros had two big priorities: "There was an opportunity to take our culture to the next level, across both new and existing businesses, and really build up agility. We were also motivated by a desire to scale the businesses using in-house capabilities, which we first had to build. We had a wealth of assets and were eager to explore their potential for further growth."
Innovation teams should be free to explore lots of possibilities, but they are not a separate island from the rest of the company. Linking every innovation effort to the company's strengths and motivations can help ensure that projects receive the greenlight based on their strategic fit.
As Nelson Mandela famously said, “Lead from the front but don’t leave your base behind.”
While it’s tempting to seek growth opportunities by focusing on what existing competitors are doing, Zumbrunnen says it’s a bad idea. "They are often doing the same as you—a bit better, a bit worse. So it’s challenging to identify through benchmarking what could be the next big move for the business, the next trend or wave to focus on."
Instead, consider the full range of growth signals as part of your research ideation. They can come from many places, even the smallest startup on the other side of the world. Data is necessary to help you understand the full landscape and make high-quality decisions. You need to find the one-in-ten-thousand, the scalable needle in the haystack—not fall in love with ideas.
You also have to be willing to pivot or reject projects based on what you learn.
At Migros, Zumbrunnen opted to test and learn with many ideas before deciding which ones would get the big investment. "I prefer to focus on making many small bets over single big changes. In our bank, it meant we could do and test multiple things. We could look at real estate, but not simply focus on mortgage products. We could be more holistic, for example, by adding insurance and other add-on services. We could explore platforms for selling and buying property. We could focus on elements within our overarching strategy, not just random blue-sky thinking."
Spread your bets to account for inevitable losses over time. The last thing you want is to place one big bet on one big option—only to have it not pan out.
Mature companies are often under pressure to create substance in the new venture fast. When you have developed a hypothesis for the business model, it's important to conduct quick, low-cost pilot tests to validate or invalidate your assumptions.
There are no crystal balls in innovation. The sooner you realize that some models scale better than others, the sooner you can pivot to models that have the best chance of delivering value.
To establish a "fail-friendly" culture and governance with the discipline to stop what wasn’t working, Zumbrunnen created a Venture Studio as a dedicated organizational unit. The unit reported directly to him for the first few years.
Funding of new innovations follows the same iterative model. With the Venture Studio, “If a new venture achieved certain well-defined goals, it automatically received more investment,” Zumbrunnen says.
Innovation is not a one-man show, one-unit show or one-specialty show. When executives come up with ideas themselves, they often draw on what they know best—their own background. Visionary ideas may get crushed before they leave the white board.
The best way of getting around this? Bring in a growth partner with the right perspectives, a solution-finding attitude, and methodologies that have been proven effective among corporate innovators.
That’s why Zumbrunnen started to collaborate with Stryber.
"Stryber knew how it works in a big corporation and also had a consulting background. Importantly, they were very focused on accountability. They wanted to achieve strong financial impact. Unlike the majority of business consultants, they were very open and transparent, very real-world focused. They were honest and learned from their mistakes. Their methodology worked. They weren’t there to praise you but tell you the truth about consumer needs," Zumbrunnen says.
“It is very difficult to make changes beyond simple improvements," he adds. "Large businesses struggle to invent versus just improve. This was very motivating for Stryber. They liked that we had high expectations. They wanted to make a difference, and they did.”
For Migros, the end result was very positive. Zumbrunnen gives specific examples: "In our health division, in just 8 weeks we created a psychotherapy platform, which focused on mental health. It is now the market leader. In our banking offering, we were able to offer one of the most complete sets of services in the market, focused on real estate customer needs. For example, we created a digital real estate broker, which was perfectly adjacent to our existing real estate business. These initiatives helped foster a culture of innovation and digitization in the whole bank, which was wholeheartedly embraced by the bank’s CEO. A profound company transformation took place, and we were recognized as the most digital Swiss bank."
Perhaps the most important realization was that Migros could develop the culture it needed to be agile and continually innovate. This was the a-ha! moment the team wanted.
Short-term successes aside, the initiative was designed for the long-term. It was clear to Zumbrunnen that true impact would require many years and need the full support of the top management. This is why he and the other executive board members at the time personally took charge of the initiative to lead it over the years.
If there's a final message here, it is this: There are a few effective strategies which can help steer your company towards long-term innovation and successful, sustaining business growth—but don't wait until it’s too late, as real impact takes time.
Zumbrunnen was so impressed with the collaboration with the Stryber team, that he agreed to join the company as its chairman after leaving Migros. He says: “With Stryber, I discovered a matter-of-fact and no-nonsense approach to innovation and business growth. I knew, once my time at Migros was over, I would once again work with Stryber.”
In his new role, Zumbrunnen will not only be steering Stryber, but also working directly with the boards and CEOs of Stryber’s clients, helping them to re-frame the strategies and narrative around how to successfully achieve growth as a business, just as he did at Migros.
For Stryber and its founders, Fabrice joining as their chairman is not only a huge honor, but also a massive commitment to customer-centricity. After all, how can a company be any more customer-centric than being run by a customer at its top?